5th Amendment State-Federal Conundrum

San Remo Hotel, L. P. v. City and County of San Francisco

This case involves a hotel in San Francisco that was mistakenly classified as 100% residential almost a hundred years ago. Now they want to convert their rooms to a tourist classification, but to do so, they are required to pay some $500,000. They made a "takings" clause argument under the California Constitution and lost. The state court judges recognized that California's Constitution's takings clause has been interpreted in the same way as the federal takings clause has been, and thus, because this law applied to a large class of people, and was a legislative action rather than an executive ad-hoc action, the test should be whether there was a "reasonable relationship" between the legislation and the governmental interest (promoting residential opportunities). The question here is, in light of a federal law requiring federal courts to "give preclusive effect" to any state court judgment that effectively decided the federal issues, are the hotel's 5th Amendment arguments precluded here? This is especially important because the hotel was required to go through the state courts, which would prevent them from ever having their federal claim heard in a federal court.

The Constitution allows Congress to require "full faith and credit" to judicial decisions across the various state boarders, which it did in federal law, and which in turn would require an exception to be carved out for the hotel to win in this case. In England the Court held that when the state courts must decide an issue before the federal question can be addressed (in this case, the state denying just compensation before the 5th Amendment is violated) "the plaintiff may reserve his right to return to federal court for the disposition of his federal claims." However, in this case the issue the state had to resolve was not independent of the federal issue, as the England decision assumes. The majority here decided that when the hotel went to state court it unnecessarily broadened its argument, and invited preclusion by asking the state court to rule on issues that would preclude federal courts from ruling on its federal claims. Specifically, the hotel asked the state court to rule on a "takings" interpretation that was effectively the same as the federal question.

The hotel's argument relies on Santini v. Connecticut Hazardous Waste Management Service, which created just the kind of exception that the hotel is looking for, "that parties 'who litigate state-law takings claims in state court involuntarily' pursuant to ['ripeness' rules set forth by the Supreme Court] cannot be precluded from having those very claims resolved “by a federal court" because the result would be "ironic and unfair." The Court here disagrees for three reasons. First, there is no right to have federal issues addressed in federal court, as long as they were resolved by a court of competent jurisdiction while determining an issue of fact or law that was necessary to its judgment. Second, the Court does not accept that exceptions can simply be drawn wherever it is convenient. Third, the hotel could have had most of their claims heard in federal court without having addressed them in state court, and those that would require a hearing in state court could be addressed there.

Chief Justice Rehnquist wrote a concurring opinion to question the rule that litigants must seek compensation in state court before addressing their 5th Amendment violations in federal court.